Dell to build second factory in Europe

Ireland out of the frame

Dell is looking to build a second manufacturing plant in Europe, but Ireland is unlikely to be considered as a possible location.

The PC maker has confirmed reports of a speech made by founder and chairman Michael Dell this week that it is considering a new plant to deal with increased demand. The company reports 30 per cent growth in Europe in the past year.

Dell has a plant in Limerick, Ireland which employs more than 3000 people; but high manufacturing and labour costs mean that it is unlikely that Dell would consider establishing a second plant in the Republic.

In his speech at the Oracle World San Francisco, Michael Dell didn't specify a location for the new plant. Industry sources quoted by Reuters claim that France is under consideration. But other reports have quashed this speculation, claiming that the new Dell plant will be located elsewhere.

A spokesperson for Dell told ElectricNews.Net that the firm is assessing needs for additional manufacturing capacity, but Limerick remains central to European operations: "Dell is a growing company and we constantly evaluate options of expansion into countries in order to meet the demands of that growth in a way that provides the best value to our customers.

"With continued strong growth in the region, it is reasonable that in time Dell will require additional manufacturing capacity, however neither a location nor a timeframe has been agreed and at this time our European Manufacturing Facility in Limerick Ireland currently has capacity to serve the region."

The establishment of a second manufacturing plant in Europe is considered an unusual move for any firm in the computer-making business, with most Dell's rivals producing PCs via contract manufacturers in Asia. This week number three PC maker IBM announced it would transfer its PC business to a joint venture controlled by China's Lenovo, in a $2bn deal.

PC market on the rise

However Dell's decision to expand its European manufacturing base coincides with a predicted rise in PC shipments next year. According to IDC's Worldwide Quarterly PC Tracker, strong third quarter results and ongoing commercial activity are reinforcing expectations for market growth in 2005.

Although growth in worldwide consumer PC shipments slipped to less than eight per cent in the third quarter of 2004 from a peak of over 25 per cent a year ago, growth in commercial shipments of 15.9 per cent was down only one per cent from a 4.5 year high of 16.9 per cent in the first half of 2004, and was up from 13.5 per cent a year ago.

Commercial growth is expected to slow in 2005 as the recent recovery matures, but should remain relatively robust at 11.3 per cent, versus projected consumer growth of only eight per cent. Total shipments are expected to reach $195.1m in 2005 on growth of 10.1 percent, with total shipment value growing by 3.9 per cent to $201bn.